The Korean way of corporate philanthropy:
Hyundai Executives Pledge $1 Billion Amid Probe [WSJ]
By JATHON SAPSFORD BY AND LINA YOON
April 20, 2006; Page A2
An offer by Hyundai Motor Co.'s chairman and his son to donate roughly $1 billion to unspecified charitable organizations as a way to make up for a major government investigation has raised questions among critics of South Korea's business and political institutions.
The auto maker, which faces a major government investigation into questionable financial dealings, apologized yesterday to the public. Prosecutors have said they plan to question 68-year-old Hyundai Motor Chairman Chung Mong Koo and his son, Chung Eui Sun, the 35-year-old president of Hyundai affiliate Kia Motors Corp. The younger Mr. Chung is likely to face questioning as early as today, though prosecutors haven't accused either of wrongdoing.
The donation offer follows similar moves by business groups in South Korea to make large contributions to charity while under scrutiny. Academics and shareholder activists have questioned the offers, saying they could be intended to smooth relations with the government rather than make meaningful changes. "Korean society is very Confucian," said Mo Jong Ryn, a professor of political science at Seoul's Yonsei University. Hyundai is "asking for forgiveness instead of dealing with its problems legally."
The apology is the latest development in a mounting probe into allegations that senior executives at a number of companies, including at South Korea's largest auto maker, Hyundai Motor, created slush funds to pay for influence illegally. Investigators are also looking into allegations of the improper transfer of control of Hyundai Motor group assets from the elder Mr. Chung to his son.
Hyundai said that the donation will include the shares held by Mr. Chung and his son in Hyundai-affiliate Glovis Co., a company established in 2001 and given lucrative rights to handle big chunks of the Hyundai group's shipping and delivery of cars and auto parts. Mr. Chung and his son own 60% of the company.
Senior Hyundai officials, bowing before cameras in Seoul yesterday, declined to admit any guilt. Instead, the company offered contrition for causing a scandal. "We deeply apologize for causing concern to the people," Hyundai Motor Vice Chairman Lee Jeon Gap said in a statement.
In recent days, Dallas-based private-equity firm Lone Star Funds offered to donate about $104 million to the South Korean government amid government scrutiny and public outrage over its pending $4.5 billion windfall on the sale of a bank there.
Samsung Group, the country's biggest chaebol, or conglomerate, offered to make a similar, $800 million charitable contribution in February, soon after prosecutors announced they had cleared the group's chairman, Lee Kun Hee, of wrongdoing in an investigation of illegal political contributions. A Samsung Group spokesman said yesterday that, because Samsung had announced the donation, the money is no longer Samsung's and that it is up to the government to decide what to do with it. But no further steps have been announced, he said. |
